Sep 24, 2010

Portside delays Rig Tenders acquisition

PT Rig Tenders Tbk (RIGS), Scomi Marine Services Pte Ltd, Portside Offshore Inc, and Grundtvig Marine Ptd Lte, have agreed to extend the validity period of the head agreement. 
Initially, those parties agreed to execute the head agreement in 6 weeks after the signing on July 12 2010. Referring to the latest agreement, those parties have agreed with 6 weeks extension up to October 18 2010 or up to the execute of the definitive agreement.
Based on the head agreement, Scomi Marine Services Pte Ltd, controlling share holder of 80.54% stakes in PT Rig Tenders Tbk (RIGS), aims to transfer its rights of shares in Rig Tenders to Portside Offshore Inc during rights issue. 
The proposed acquisition would potentially result a change of control in Rig Tenders. Portside, as Rig Tender's share holder, has committed to participate through rights issue whereby Portside will acquire the rights of 80.54% shares or equivalent to US$57.8 million from Scomi Marine Services. 
Portside will act as standby buyer of Rig Tenders' rights issue. By the end of March 2010, Scomi Marine owns 80.54% stakes or 490.59 million shares in Rig Tenders, UOB Kay Hian Private Limited holds 9.86%, and public holders hold the remaining shares. 
Considering the acquisition price, Portside will buy 80.54% stakes in Rig Tenders at US$0.117 per share or Rp1,064.35 per share.
Following Portside's acquisition, Rig Tender expects the deal will bring a positive value in the future. Based on the agreement, the deals will be subject to the completion of terms and conditions as agreed by all parties. 
In parallel with the proposed shares transfer, Rig Tenders also plans to acquire shares in CH Logistics Ltd, CH Ship Management Pte Ltd, Goldship Pte Ltd, Sea Master Pte Ltd, and PT Batuah Abadi Lines. 
The target companies own ships and has main business of vessels rental. The fleet consists of 51 vessels with contracts to provide coal transportation in Indonesia. 
The transactions are expected to provide a chance to Rig Tenders to access a raising energy business sector in Indonesia as well as to increase its profitability.
To acquire the target companies, Rig Tenders requires US$171.8 million of financing. In return, RIGS intends to hold rights issue with preemptive rights in a bid to raise US$71.8 million of capital, while US$100 million will be bankrolled by bank loan facility.

Disclosure: No position at the stock mentioned above.

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